The employment contract

A written employment contract is to be entered into in all employment relationships. This applies irrespective of whether the position is permanent or temporary, and irrespective of the duration of the employment relationship. The contract is to stipulate the employer's and employee's rights and obligations and contain all significant factors of importance to the employment relationship. A written employment contract is fundamental for all appointments and is important to ensure that both the employee and employer clearly understand the working conditions.

Requirements as to the employment contract:

In the first place, an employment contract must be entered into in writing, see section 15-5 of the Norwegian Working Environment Act. The requirement of being in writing is important because both parties will thus have a document that clearly shows what they have agreed on. It is the employer that is responsible for preparing a draft employment contract which the employee must then be given an opportunity to examine.

The rules on the minimum that an employment contract must contain are stipulated in section 14-6 of the Working Environment Act. Naturally, items and factors in addition to those mentioned in the Act may be included.

a) the identity of the parties

This is particularly important when the company law circumstances on the employer side may be unclear. For example, when the employer's operations consist of a number of different entities (a group relationship). In order to make this clear, the employer's organisation number may be stated in the employment contract.

b) the place of work

If there is no fixed or main place of work, the employment contract is to provide information to the effect that the employee is employed at various locations and state the registered place of business or, where appropriate, the permanent residence of the employer.

c) a description of the work or the employee's title, post or work category

This is in order to clarify what the job involves. If the employee has been given a job description, reference may also be made to this.

d) the date when the employment relationship starts

This date is important for calculating a number of deadlines. For example, the deadline for entering into a written contract, when the trial period starts and the length of an employee's period of dismissal is to be calculated on the basis of this date.

e) estimated duration if the employment relationship is temporary

If temporary employment is permissible and the parties have agreed that the employment is to be temporary, it is important to state the period of time for which the employment relationship is to exist.

f) any provisions applicable to a trial period

These are important, among other things because the threshold for an employer being able to dismiss an employee is lower if the employee is dismissed during the trial period and because a mutual period of notice of 14 days applies unless otherwise agreed on in writing or stipulated in a collective bargaining agreement. Many people are worried about trial period provisions but stringent requirements nonetheless apply to the dismissal of anyone during a trial period. In addition, the trial period is mutual and, if the employee is not satisfied with the employer or the tasks were not as expected, the employee can also terminate the employment relationship with a shorter period of notice.

g) the employee's right to holiday and holiday pay and the rules governing the fixing of dates for holidays

The Norwegian Holiday Act entitles all employees to take 25 workdays off as holiday every holiday year. That means an annual holiday period of four weeks and one day. In addition, employees may be entitled to take five workdays off on holiday if this is agreed on in an employment contract and/or collective bargaining agreement. In order to be able to demand five weeks' holiday, it is therefore important to have this stipulated in the employment contract.

h) the employee's and employer's periods of notice

Unless otherwise agreed in the employment contract or stipulated in a collective bargaining agreement, a mutual period of notice of one month applies.

i) the prevailing or agreed salary when the employment relationship starts, any supplements and other remuneration that do not form part of the salary, such as pension contributions and meals/overnight accommodation allowances, the method of payment and the date when salary is to be paid.

Remember that you can negotiate on the conditions in an employment contract. It is important to be aware that you can ask for a new offer if you are not satisfied.

j) the length and location of the agreed daily and weekly working hours

Basically, all employees are covered by the provisions regarding working hours and are thus entitled to overtime pay, but it is nonetheless the case that many are exempted from working hours in their employment contracts and are therefore not entitled to overtime pay. It is important to include in the employment contract that the job provides overtime pay and clarify the amount of overtime that is expected.

k) the length of breaks

l) an agreement on a special working hours scheme

for example in the case of night work or if the employee needs a different working hours scheme for health or social reasons.

m) information on any collective bargaining agreements that regulate the employment relationship.

If the agreement has been entered into by parties outside the company, the employment contract must state the names of the parties to the collective bargaining agreement.

Other important factors:

A competition clause is a provision in the employment contract which is intended to prevent the employee from becoming a dangerous competitor to the company after the employee has left the company. The clause often states that the employee cannot start to work for an enterprise, or start its own enterprise, that competes with the activities of the company. Such a clause will be very restrictive if the employee changes jobs in the future.

Remember that the employment contract presented by the employer is a draft agreement that is to be negotiated on. This means that an employee can try to remove, or limit, the period covered by or extent of a competition clause. Tekna therefore advises members who have a competition clause in their employment contract to contact Tekna for an assessment of the clause's validity.

If the company has any bonus schemes, it is important to include in writing the scheme's further defined criteria and consequences. This will be a more detailed definition of the criteria for achieving a bonus, how the bonus is to be calculated, the date when the bonus is payable and the persons covered. In addition, it should be stated that the bonus will form part of the employee's holiday pay basis and pension accrual basis. Bonuses are not stipulated in any regulations, and here too the employment contract, supplemented by other agreements and the practice that has been agreed on/established, will form the starting point.

In the case of illness or parental leave, the Norwegian national insurance scheme only covers up to 6G (G = the national insurance basic amount), and most of Tekna's members have a salary which is higher than this. It is therefore important to ensure that you will receive your full salary if you are ill or on parental leave, so that your employer pays the difference.

Important items to check before you enter into an agreement:

Check whether you are entitled to five weeks' holiday
- according to the Norwegian Holiday Act you are only entitled to four weeks' holiday.

Check whether the job provides overtime pay and clarify how much overtime is expected.
- basically, all employees are covered by the provisions regarding working hours in the Working Environment Act and are thus entitled to overtime pay.

Be careful about competition clause
- Tekna advises members who are given an employment contract with a competition clause to contact Tekna for an assessment of the clause's validity.

Make sure the contract specifies where the work is to take place.

Make sure the bonus criteria are stipulated in writing if the company has bonus schemes.

Check the quality of the pension and insurance schemes.

Check whether you receive your full salary if you are ill or on parental leave.

Remember that you can negotiate on pay and conditions.

Modified date: Monday, March 16, 2015